Long Island’s road to energy disaster began in 1965 when the privately-owned LILCO announced plans to build Shoreham Nuclear Power Plant. Originally it was supposed to cost $65 to $75 million but the costs went out of control.

Cost overruns were caused in part by corruption. Some overruns were caused by environmental activists forcing them to continually retrofit. The costs rose to $5.5 billion. It took twenty years to build and, for that reason alone, the price had to go up just because prices rose.

The plant was ready for testing in 1985 but by then the elite on the East End and the environmental activists won the battle to close the plant.

In 1986 then-Governor Mario Cuomo pushed the New York state legislature to create the state regulatory agency [LIPA] which would in turn purchase the Shoreham Nuclear Power Plant. In 1988, Mario Cuomo reached a deal with LILCO and, four years later, in 1992 the Shoreham plant was transferred to LIPA for $1.

This deal released LILCO from the financial burden of having to maintain Shoreham in the future, while passing the 6 billion dollar debt, that LILCO had amassed in building the Shoreham plant in the 1970’s, on to Long Island’s citizens.

Mario Cuomo who oversaw this bad deal is Andrew’s father. Andrew is no stranger to bad deals. He oversaw HUD during the subprime mortgage crisis. Andrew was one of the people insisting that mortgages be given to people who couldn’t possibly pay them off.

THE PRESENT

The last two hurricanes have highlighted some of the failures of the utility which should lay squarely on the shoulders of the politicians but politicians have expertly managed to deflect the blame, especially Andrew Cuomo.

Cuomo is primarily responsible for the management but hasn’t managed it. LIPA has not had a permanent chief executive for two years. Five spots on the 15-member board are vacant, 3 of which are Mr. Cuomo’s to fill.

The authority’s chairman, Howard E. Steinberg, has stayed on past an expired term. He was originally appointed by Gov. George E. Pataki, who left office almost six years ago.

LIPA started out with about 20 employees and now has 101 employees, half of whom earn more than $100,000 a year. They actually averaged $147,800 a year. Some LIPA employees make more than $200,000 a year. [Once it became a public agency, the taxpayers inherited the union wages and benefits]. As their salaries rose so did the rates, with LIers paying an average of almost $500 more from 2010 to 2011. Service and efficiency have gone down.

Cuomo said the system is “fatally flawed.” It might have done better if he had done his job and appointed a management team and if he pushed for FEMA to pay the $10 million they owed LIPA from the last hurricane (Irene).

Mr. Cuomo recently established a high-level panel, the Moreland Commission, to investigate how utilities across New York, including the authority, handled Hurricane Sandy and other storms.

He also revived a proposal that he made in his 2010 campaign to combine the authority with other state energy agencies. [If the local government fails, go to a bigger failed system – great idea].

Cuomo is also considering privatizing the authority if he can find a buyer.

Of course, no company would ever take on LIPA’s legacy of debt — and the state would never let bondholders take the hit. So, we’ll keep paying for decades of political chicanery.

Cuomo asked the feds to pay 100% of the cost of Hurricane Sandy so he doesn’t have to raise rates. There is not much of an incentive for utilities to improve if they get a free ride.

Mario Cuomo is the one who pushed the deal to make our energy system a state industry and his son Andrew is pushing to have it go back to being a private agency, which is what it was twenty years ago.

All this finagling and our energy system has evolved into a “fatally flawed” system, to quote Andrew, and we have an additional $1.7 billion in debt.

Will costs miraculously go down and will they be infused with the Holy Spirit of efficiency once they go back to being private?

Once the honeymoon is over, the politicians will use them as the whipping boy again as they look to level blame on everything and everyone for their own cowardly decisions.

The utility at Shoreham was over-taxed, which added to their expenses. Long Island real estate taxes are now among the highest in the nation as a result. The greedy politicians feasted on the utility’s money to “buy” their constituents and now have to tax us to death to make up for the shortfall. This entire affair was corrupt!

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